The city recorded office transaction volume of 5 mn sq ft in H1 2024 from 2.9 mn sq ft in H1 2023. (Representative image)
Credit: Reuters Photo
Hyderabad: Hyderabad office leasing market experienced a sharp 71 per cent Year on Year (YoY) growth, with a total of 5.0 mn sq ft transacted during H1 2024. This growth can be primarily attributed to increased absorption by Global Capability Centers (GCCs) and flex space operators, said a report by global property consultancy Knight Frank India.
The city recorded office transaction volume of 5 mn sq ft in H1 2024 from 2.9 mn sq ft in H1 2023. The office transactions from GCCs increased from 0.2 mn sq ft in H1 2023 to 3 mn sq ft in H1 2024, which underscores the growing importance of Hyderabad as a hub for global operations. The new office supply in the city was recorded at 5.0 mn sq ft. The average transacted rent recorded an increment of 4 per cent to Rs 68/sq ft/ month.
In H1 2023, the IT sector which has been the mainstay of Hyderabad’s economic landscape, experienced a significant slowdown due to the economic downturn in the West and resulted in a drastic drop in occupier activity from this sector.
Fast forward to 2024, the sector has been showing signs of recovery, with hiring on the rise for profiles in emerging information technology such as Artificial Intelligence/Machine Learning (AI/ML) and GCCs taking the lead resulting in an increase in space take up, further said the Knight Frank's report 'India Real Estate: Residential and Office (January - June 2024)'.
Office completions increased sharply by 300 per cent year-on-year during H1 2024. New supply entered the market in key areas such as Peripheral Business District (PBD west) - Gachibowli and Secondary Business Districts (SBDs) - HITEC City and the Financial District, by major developers such as Vasavi, Raheja, and Prestige.
GCCs accounted for a notable 60 per cent of the leased office space at 3.0 mn sq ft, a marked increase from the 6 per cent recorded in H1 2023. About 31 per cent of the overall office absorption made by GCCs in the country were executed in the office market of Hyderabad.
Flex space operators leased the second highest amount of space and accounted for 15 per cent of the total leased office space in the city during H1 2024. Key players in this sector, such as Isprout, WeWork, Awfis, and The Headquarters, were particularly active during this period. Office space leasing by flex space operators increased by 45 per cent YoY to 0.75 mn sq ft in H1 2024 from 0.52 mn sq ft in H1 2023.
“GCCs continues to be the biggest end-occupier of Hyderabad’s commercial market. The robust leasing activities has propelled upward mobility in rental value of the commercial market of the city. India’s relative economic strength in the background of improving global sentiment is expected to further expand the office demand in Hyderabad city in the second half of the year,” said Knight Frank India's National Director- Occupier Strategy and Solutions (Hyderabad & Chennai), Joseph Thilak.
Rental rates in Hyderabad have increased by 4 per cent YoY during H1 2024, with HITEC City experiencing a 5 per cent YoY rise. This uptick can be attributed to the increased demand for office spaces, particularly from GCCs, which has driven up rentals in these areas.
In fact, improvements in infrastructure and connectivity within HITEC City have also made it more attractive for businesses, thereby driving up rents. In contrast, rents in other business districts such as the CBD, PBD West, and PBD East have remained flat.
Residential home sales surge
Also, Hyderabad residential market continued to show robust growth, propelled by economic factors, infrastructural enhancements, and changing buyer preferences. Sales have surged by 21 per cent YoY in the first half of 2024, with 18,573 units getting sold. More than half of these transactions were in the premium segment, with prices of Rs One crore and above.
This highlights the city's increasing attractiveness as a preferred destination for homebuyers seeking lifestyle upgrades and improved living conditions. Residential launches in the city declined by 2.4 per cent YoY to 22,300 units in H1 2024.
Since 2021, a noticeable trend has emerged in Hyderabad's residential market, with homebuyers consistently seeking to upgrade their living spaces.
In line with homebuyer preferences, developers launched a total of 22,300 units in the first half of 2024. Notably, 67 per cent of these new launches were for homes priced over Rs one crore.
Homes priced above Rs one crore, have increased sharply, surging from 45 per cent in H1 2023 to a substantial 62 per cent in H1 2024. Transactions in this segment have increased by 66 per cent YoY to 11,436 units during H1 2024 when compared with 6,881 units in H1 2024.
Homes priced below Rs 50 lakhs have declined from 13 per cent in H1 2023 to 9 per cent in H1 2024 and the volume of transactions have declined by 17 per cent YoY from 2,004 units in H1 2023 to 1,666 units in H1 2024.
Homes priced between Rs 50 lakhs to Rs one crore have witnessed as sharper decline from 42 per cent in H1 2023 to 29 per cent in H1 2024. About 5,471 residential units were sold in this home price segment, witnessing a decline of 15 per cent from 6,469 units in H1 2023.